Inflation Stickiness Keeps Dollar Under Pressure!

The U.S. labor market is softening. Last Friday’s NFP print came in at just 22,000 jobs against expectations of 78,000, reinforcing the slowdown already flagged by previous downward revisions. With fewer jobs being created, household spending power weakens, which in turn pressures growth and inflation.

Now, attention shifts to this week’s Producer Price Index (PPI). Both headline and core are expected at 0.3% month-on-month, down sharply from the prior 0.9%. That tells me inflation pressures remain sticky but are easing from peak levels. Since PPI feeds directly into CPI, it’s an early signal that consumer inflation may also cool.

For me, the macro picture still points toward Fed rate cuts — likely 25 basis points this month, with more on the table for October and December. This dovish outlook weighs on the U.S. dollar, and I continue to favor shorts on the greenback.

Technically, I’m targeting EUR/USD at 1.20 by year-end, with near-term resistance around 1.1870. I also like longs in GBP/USD, AUD/USD, and NZD/USD as dollar weakness broadens. On the DXY, my 97.00 target has been hit, and I expect further downside as markets keep pricing in policy easing.

The trade setup remains clear: sell the dollar on rallies, buy major peers into strength, and stay positioned for a softer U.S. economy with inflation cooling gradually.

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